What to do about car debt?

Bouncybubbles

Hi all


I am one of the very fortunate few who have managed to pay off my DMP :beer: and aside from my car and mortgage am debt free. My car (a corsa) currently costs me £300/month on finance there was some negative equity added. Plus obviously fuel, tax ins etc. so all In my car probably costs around £400/month for a corsa! that's almost as much as my mortgage. I have looked into getting rid however there are two issues. 1. I need a half decent car (not breaking) for work as my work involves driving inner city and rural 25-40 miles a day. 2. my car is still sat quite nicely in negative equity.


I genuinely don't know what to do as it stands I have had it for roughly 30 months of a 60 month agreement and it was brand new when I brought it. I need a bigger car for my job as I cannot fit anything that I need to carry into my 3 door car (hindsight is amazing). I thought about trying to trade it (hopefully neg equity will have balanced out) towards the end of next year for a larger car (older) that will be less a month but at the same time I am reluctant to take on yet more debt after clearing what I previously owed. I just don't know what is for the best.....

CraftyTwinkle

Is voluntary termination an option for you? Once you have paid off 50% of the loan (including interest and fees) you can hand the car back. http://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

theoretica

If you are thinking of waiting more than a year to trade in, how strong is the need for a larger one?

EssexHebridean

Do you "need" a larger car (ie can you "only just" fit everything in that you need for your job, or are you having to leave essentials behind?) or do you just "want" one? A modern Corsa is not that small, all things considered - have you made sure to clear anything not required for everyday use out of the boot space, that sort of thing?

I'd say you need to write down all the financials - how much seeing the deal out will cost you, how much terminating early will cost you, and the estimated cost of changing to a bigger car (remember that as well as likely an increased cost of the car itself, things like tyres and servicing will also cost more.)

Personally I'd say get yourself into a position where you are clear of the current finance deal and make do with what you have until you are in a position to save for something that will suit you better. Having a car on finance does NOT have to be a given - you know how being in debt feels - I can't imagine why you'd want to continue to put yourself in that position? Just because a car is older it doesn't mean it has to be unreliable - it just means that you're not getting killed for the depreciation on it - some other mug has taken that hit!